Lots of room for increased public re-investment

November 1, 1999

Ottawa: Alternative Federal Budget 2000 today released its Alternative Fiscal and Economic Update: Policy Options for the Federal Government.

The main findings of the report are as follows: Under reasonable economic assumptions, the federal government will generate a final fiscal surplus of over $6 billion in the current (1999-2000) fiscal year, and almost $12 billion in the fiscal year covered by Paul Martin's upcoming budget (2000-2001).

Over the next five budget years (fiscal 2000-01 through fiscal 2004-05), federal surpluses (in the absence of major new program or tax changes) will accumulate to a whopping $117 billion. This projection even allows for considerable increases in "core" federal program spending in the next two years above officially budgeted levels, to reflect ongoing population growth, one-time expenses, and other factors. These large surpluses arise thanks to the positive impact of continued economic growth on federal tax revenues, and the ongoing decline of debt service payments as a share of GDP (the result both of a falling debt burden and lower effective interest rates).

This analysis confirms that the federal government has ample fiscal room to announce and fund major new investments in human services and public infrastructure in its coming budget, without increasing tax levels and without threatening its balanced budget position.

This report was produced by Dr. Jim Stanford, chair of the Macro and Fiscal Policy Committee of AFB 2000. The full report, Alternative Fiscal and Economic Update: Policy Options for the Federal Government, can be obtained by calling the CCPA at: 613-563-1341: or it can be downloaded from the CCPA web site at; www.policyalternatives.ca

The Alternative Federal Budget (in its sixth year) is a project of the Canadian Centre for Policy Alternatives and Cho!ces, a Winnipeg-based social justice coalition. It brings together representatives from a wide spectrum of Canadian civil society.